                                 CODE OF VIRGINIA

REQUIRED CONTRACT PROVISIONS; REINSURANCE INTERMEDIARY MANAGERS (§ 38.2-1352)

Transactions between a reinsurance intermediary manager and the reinsurer it
represents in such capacity shall only be entered into pursuant to a written
contract, specifying the responsibilities of each party, which shall be approved
by the reinsurer&#8217;s board of directors. At least thirty calendar days
before such reinsurer assumes or cedes business through such reinsurance
intermediary manager, a true copy of the approved contract shall be filed with
the Commission for approval. The contract shall, at a minimum, provide that:

1. The reinsurer may terminate the contract for cause upon written notice to the
reinsurance intermediary manager. The reinsurer may immediately suspend the
authority of the reinsurance intermediary manager to assume or cede business
during the pendency of any dispute regarding the cause for termination.

2. The reinsurance intermediary manager will render timely accounts to the
reinsurer accurately detailing all material transactions, including information
necessary to support all commissions, charges and other fees received by, or
owing to the reinsurance intermediary manager, and remit all funds due under the
contract to the reinsurer on not less than a monthly basis.

3. All funds collected for the reinsurer&#8217;s account will be held by the
reinsurance intermediary manager in a fiduciary capacity in a bank that is a
qualified United States financial institution as defined in &#xA7; 38.2-1347.
The reinsurance intermediary manager may retain no more than three months&#8217;
estimated claims payments and allocated loss adjustment expenses. The
reinsurance intermediary manager shall maintain a separate bank account for each
reinsurer that it represents.

4. For at least ten years after expiration of each contract of reinsurance
transacted by the reinsurance intermediary manager, the reinsurance intermediary
manager will keep a complete record for each transaction showing:
			a. The type of contract, limits, underwriting restrictions, classes or risks
and territory;
			b. Period of coverage, including effective and expiration dates, cancellation
provisions and notice required of cancellation, and disposition of outstanding
reserves on covered risks;
			c. Reporting and settlement requirements of balances;
			d. Rate used to compute the reinsurance premium;
			e. Names and addresses of assuming reinsurers;
			f. Rates of all reinsurance commissions, including the commissions on any
retrocessions handled by the reinsurance manager;
			g. Related correspondence and memoranda;
			h. Proof of placement;
			i. Details regarding retrocessions handled by the reinsurance intermediary
manager, as permitted by subsection D of § 38.2-1354, including the identity of
retrocessionaires and percentage of each contract assumed or ceded;
			j. Financial records, including but not limited to, premium and loss
accounts; and
			k. When the reinsurance intermediary manager places a reinsurance contract on
behalf of a ceding insurer:

   1. Directly from any assuming reinsurer, written evidence that the assuming
   reinsurer has agreed to assume the risk; or

   2. If placed through a representative of the assuming reinsurer, other than an
   employee, written evidence that such reinsurer has delegated binding authority
   to the representative.

5. The reinsurer will have reasonable access to and the right to copy all
accounts and records maintained by the reinsurance intermediary manager related
to its business in a form usable by the reinsurer.

6. The contract cannot be assigned in whole or in part by the reinsurance
intermediary manager.

7. The reinsurance intermediary manager will comply with the written
underwriting and rating standards established by the insurer for the acceptance,
rejection or cession of all risks.

8. Sets forth the rates, terms and purposes of commissions, charges and other
fees that the reinsurance intermediary manager may levy against the reinsurer.

9. If the contract permits the reinsurance intermediary manager to settle claims
on behalf of the reinsurer:
			a. All claims will be reported to the reinsurer in a timely manner;
			b. A copy of the claim file will be sent to the reinsurer at its request or
as soon as it becomes known that the claim:

   1. Has the potential to exceed one percent of the insurer&#8217;s surplus to
   policyholders as of December 31 of the last completed calendar year, an amount
   set by the reinsurer, or any other amount deemed appropriate by the
   Commission, whichever is less;

   2. Involves a coverage dispute;

   3. May exceed the reinsurance intermediary manager&#8217;s claims settlement
   authority;

   4. Is open for more than six months; or

   5. Is closed by payment of an amount exceeding one percent of the
   insurer&#8217;s surplus to policyholders as of December 31 of the last
   completed calendar year, an amount set by the reinsurer, or any other amount
   deemed appropriate by the Commission, whichever is less;
   				c. All claim files will be the joint property of the reinsurer and
   reinsurance intermediary manager. However, upon entry of order of liquidation
   or the appointment of a receiver for the liquidation of the reinsurer, such
   files shall become the sole property of the reinsurer or its estate; the
   reinsurance intermediary manager shall have reasonable access to and the right
   to copy the files on a timely basis;
   				d. Any settlement authority granted to the reinsurance intermediary
   manager may be terminated for cause upon the reinsurer&#8217;s written notice
   to the reinsurance intermediary manager or upon the termination of the
   contract. The reinsurer may suspend the settlement authority during the
   pendency of the dispute regarding the cause of termination.

10. Where electronic claims files are in existence, the contract must address
the timely transmission of the data.

11. If the contract provides for a sharing of interim profits by the reinsurance
intermediary manager, such interim profits will not be paid until one year after
the end of each underwriting period for property business and five years after
the end of each underwriting period for casualty business, or a later period set
by the Commission for specified lines of insurance, and not until the adequacy
of reserves on remaining claims has been verified pursuant to subsection C of
&#xA7; 38.2-1354.

12. The reinsurance intermediary manager will annually provide the reinsurer
with a current financial statement prepared by an independent certified
accountant in a form acceptable to the Commission.

13. The reinsurer shall, at least semiannually, conduct an on-site review of the
underwriting and claims processing operations of the reinsurance intermediary
manager.

14. The reinsurance intermediary manager will disclose to the reinsurer any
relationship it has with any insurer prior to negotiating any business with such
insurer pursuant to this contract.

15. Within the scope of its actual or apparent authority, the acts of the
reinsurance intermediary manager shall be deemed to be the acts of the reinsurer
on whose behalf it is acting.

HISTORY: 2001, c. 706.